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KT edit: Cools heads prevail to delay all out trade war

The two largest economies raising taxes against each other could drag the global financial system closer to the cliff edge.

In a breakthrough of sorts, US President Donald Trump and his Chinese counterpart Xi Jinping agreed on a 90-day hiatus to the trade war. At a post-G20 summit meeting in Buenos Aires, Trump decided to go back on his vow and not ratchet up tariffs - temporarily. China on its part agreed to buy substantial amounts of US goods from the agricultural, energy and industrial sectors to bridge the trade gap. In his true style, Trump had kept his opponent and the world guessing by announcing, before the Summit, that US tariffs on $200 billion worth of Chinese goods would be raised from 10 per cent to 25 per cent as of January 1 if the two countries failed to reach an agreement.
But the Chinese aren't like anyone the president has dealt with before, and it was important for Xi to walk away from the table with a deal that would save his face. Since July, the US has hit $250 billion of Chinese goods with tariffs. And China retaliated, but with less room to manoeuvre since the US buys much more from China than the communist country does from the US.
However, Trump's growing anxiety on the long-term impact of the trade war and its adverse effects on his vote bank necessitated a rethink. And since complete withdrawal is not his style, the decision to maintain status-quo can the best outcome. The two largest economies raising taxes against each other could drag the global financial system closer to the cliff edge. The fact that both sides also pledged to negotiate on structural changes regarding forced technology transfer, intellectual property protection, and cyber intrusions are also reassuring since they have been serious sore points.
But, again, this is not a suspension of the trade war, just a suspension of the escalation of the trade war, with the threat of new tariffs still hanging over China's head. Mere agreements to stall further fire could bring about a lukewarm reaction. What is needed is an outright compromise between the two countries. And 90 days is enough time for both leaders to sit back and evaluate the evident downward trend and to negotiate on how a balance in trade can induce growth.